Moving into the Canadian Ecommerce Market – Why Now?

Posted

August 18, 2017

in

Retail & Ecommerce Logistics

US and European retailers have been watching the ecommerce market in Canada for years, waiting for the right time to enter. With thousands of boots on the ground throughout Canada, SCI is entrenched in the retail space, so if you’ve been waiting, we can confirm that there is no better time than now to expand your online operations into Canada, and allow you to tap into a whole new market, increasing sales & revenue. E-commerce start-up costs are low compared to establishing brick and mortar operations. Furthermore, the income generated through online sales can help reduce start-up costs when fully moving into the Canadian market with both brick & mortar and online stores, making it an excellent segue. So why do we think that now is the right time to expand operations into Canada?

1) The market is expanding and can accommodate more retailers

The Canadian e-commerce market has shown consistent year over year growth over the last 5 years. Canada Post revealed that 80% of Canadians made at least one online purchase in 2016, with an average spend per transaction of around $101.00.

Many of Canada’s leading brick and mortar stores are still struggling with the transition to an omni-channel presence, from both a front end and back end perspective. This has left a hole in the market that other retailers such as Amazon are jumping in to fill. Among a host of US based retailers, Amazon has made massive investments in the Canadian market recently, the largest being its $13.5 billion-dollar purchase of Whole Foods. Its little wonder, as according to a BMO report, in 2016 Amazon generated $3.5 billion + in sales, up from $2 billion in 2014. Also in this same report, Peter Sklar, a retail analyst for BMO confirms: “There is a sizable gap in Canadian e-commerce sales between the company and all the other retailers,”

Walmart Canada responded with its “endless aisle, which increases the number of products available on Walmart.ca, and is launching in-store pickup and a free 2-day shipping policy to combat lost sales to Amazon & eBay, and in an effort to merge the online experience with the in-store experience, something Amazon cannot do.

This flurry of activity confirms that the Canadian market can sustain more competition; however, the window of opportunity is short. Once these other large retailers have established Canadian e-commerce operations, it will require much more effort for companies to move in, set up shop, and capture market share away from them.

One of the secrets to capturing growth in the Canadian online market is to tap into the hyper-shopper, which is defined as shoppers who purchased goods online from more than 6 product categories. These shoppers make up 27% of the Canadians who made online purchases. The number of hyper shoppers is increasing every year. Incidentally, our organization can help you effectively target these customers.

2) Low Canadian currency conversion rates

Another great reason to enter the Canadian market right now is that the currency rate is low and will likely stay that way. In fact, historically speaking the average Canadian dollar has been trading against the USD at $0.76 over the past 3 years, and $0.89 for the last 8 years. While it is hard to predict what will trigger the next change, it’s a pretty safe bet that the Canadian dollar will be less than the USD.
Because the Canadian dollar is low right now, critical e-commerce implementation elements such as logistics operation set-up, website, marketing campaigns and labour costs will cost less. Right now is the perfect time to take advantage of the low CDN to establish e-commerce in Canada as the Canadian dollar can go up at any time causing many of these start up and operational costs to increase.

3) Ready to go infrastructure

Due to the size, geography, and irregular population density of Canada, many companies that are considering moving into the market hesitate due to the complexity of the supply chain operation in the country.

While this is true if you’re dealing with multiple logistics providers, what many companies aren’t aware of is that SCI already has an established infrastructure built up over decades and that in addition to traditional supply chain services, SCI also specializes in:

Leveraging SCI’s ready to go Canadian network and end to end supply chain makes it easy to get your product into the hands of your customers anywhere in the country, without the risk and costs associated with dealing with multiple logistics providers. In combination with our core retail related services and operations, from receiving the customer order to delivering this order to them, SCI’s value-added services eliminate extra touch points in the retail supply chain while reducing costs.

If you are thinking of moving into the Canadian e-commerce market, contact one of our retail supply chain expertstoday and learn more about how your company can thrive in Canada!

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As a 3PL partner that is trusted by clients in the retail, e-commerce, technology, and healthcare sectors, SCI provides end-to-end supply chain solutions that improve their clients’ business results and customer satisfaction.